ISLAMABAD: The federal government, in a bid to avoid electricity crisis for the next three summer months, has decided to make billions of rupees worth payment of circular debt to Independent Power Producers (IPPs) and government-owned power generation companies (GENCOS) through Rs200 billion Islamic Sukuk, Profit has learnt.
According to sources, the Power Division has prepared a plan to spend the Sukuk amount by making payments to 79 IPPs and GENCOs.
However, it was decided “not to pay any amount to 25 IPPs including the two power plants of Jahangir Khan Tareen” which are installed at his sugar mills.
Sources said the Power Division has also decided to halt more than 40pc payments of some IPPs mentioned in the power sector inquiry report, including the IPPs owned by an adviser to PM.
They said these IPPs would be given remaining payments in the light of the recommendations of a committee which is currently engaged in negotiations with IPPs regarding “change in their power purchase agreements”.
Sources said the payments to IPPs and the GENCOs would be made without the pre-audit pattern of clearing circular debt which was done in the year 2013.
It is pertinent to mention that the power sector is currently faced with serious financial crisis mainly owing to circular debt, lesser number of collections and reduced power demand amid coronavirus outbreak.
Sources expect the electricity demand to jump till August, whereas IPPs and GENCOs continue to face liquidity constraints; GENCOS are unable to purchase imported gas, coal and furnace oil.
If these GENCOs are not paid immediately, it is feared that there will be severe power shortage with a rise in temperature across the country, sources added.
“The power sector has been adversely impacted by the Covid-19, while the sector’s circular debt will be increased by more than Rs250 billion during the next three months if payments are not made to IPPs and GENCOs,” said a Power Division official on the condition of anonymity.